When you’re looking to grow your business or keep things moving through a rough patch, having easy access to finance really is a non-negotiable. Whatever form it takes, be it asset finance, invoice finance, or a loan, the reality is that many lenders are reluctant to go ahead without some form of Personal Guarantee. For you, that’s where things can get risky.
If you agree to a Personal Guarantee, it means you’re personally on the hook if your business can’t repay its debt. It’s not a theoretical risk. In the worst cases, it could mean your home, savings, or other personal assets are in jeopardy. Having worked in the industry for many years, we get that this is a big responsibility that can weigh heavily, especially if you’re working with tight margins. In these situations, personal guarantee cover is a huge help.
What Does Personal Guarantee Cover Do?
Personal guarantee cover (you might also see it called personal guarantee insurance) is basically a safety net. If things go wrong and the guarantee is called in, the policy gives you a level of financial protection by reimbursing a large portion of your liability.
If you choose a policy that’s tailored to your needs, you could protect up to 80% of your exposure. That’s a massive cushion for directors and business owners who need to sign on the dotted line but don’t want to bet the farm on it.
Why It Matters in the Real World
Deciding whether you want to sign a Personal Guarantee and move the business forward, or walk away from essential funding, is a really frustrating trade-off. It’s also one that’s getting more and more common as lenders tighten up and demand more security.
The problem is that signing a Personal Guarantee doesn’t just affect your balance sheet. It affects your sleep, your family, and your decision-making. When you link personal and professional risks so tightly, it’s so easy to become extra cautious, which might be at the detriment of your business.
Personal guarantee cover breaks that link, and means you can separate your home life from your business life. You’re free to push ahead with the deal, knowing you’ve got a fallback if the worst happens.
There Has Been a Rise in Demand
Economic uncertainty is lingering, and more business owners have started turning to personal guarantee cover to give themselves some breathing space. Increased insolvency risks, inflation, and cautious lenders have all played their part. There’s been a noticeable shift in awareness, with more small and medium-sized businesses asking the right questions before signing anything binding.
Who Needs Personal Guarantee Cover?
You don’t have to be a multinational to justify this kind of cover. In fact, it’s small and medium-sized businesses that really stand to benefit the most. For these companies, the risk can be much more acute, and directors tend to put their own assets on the line more regularly than in larger corporations.
This kind of financial protection makes sense for directors raising commercial finance, businesses using loans or other finance agreements, as well as start-ups and scale-ups with big plans but lean capital. Essentially, if your name’s on the guarantee, this should be on your radar.
A Smarter Way to Borrow
Funding really doesn’t need to be all or nothing. If you go for a personal insurance package that’s built for business risk, you actually empower yourself to say yes to finance without the stress. It’s a smart move, too, as it signals to lenders that you’re serious without putting everything you’ve worked for on the line.
The idea isn’t to remove accountability.
Personal guarantee cover is there to give you breathing room so you can focus on strategy, growth, and opportunity. You’re still backing the business, but you’re doing it with a safety net. And in today’s lending climate, that kind of approach makes a big difference.
Need Personal Guarantee Cover that Moves With You?
When you’re choosing from personal insurance providers, one of the most important things to look for is flexibility. At Bluestar Business Finance, that’s precisely what we give you. Policies can be tailored to fit both new and existing guarantees. You can even cover multiple guarantees under one plan, which is handy if you’ve built up layers of finance over the years.
What our personal guarantee cover offers:
- Cover for up to £550,000 for secured loans.
- Cover for up to £400,000 for unsecured loans.
- Expert business advice as part of the service.
- Flexible policy options for different structures and guarantee types.
How Bluestar Business Finance Helps You Protect What’s Yours
At Bluestar Business Finance, we channel decades of combined experience to bring you flexible personal guarantee cover that gives you the confidence to make bold financial moves. Our policies cover up to 80% of your Personal Guarantee exposure, so you can protect your assets without complicating the borrowing process.
It’s a smarter way to get the funding you need, without putting your personal finances at risk. To find out more about Bluestar’s personal guarantee insurance, or to speak to a member of the team, get in touch today or ask us how this cover could fit your current finance arrangements.
FAQs
What does personal guarantee insurance cover that standard business insurance doesn’t?
Standard business insurance covers operational risks like property damage, liability or employee claims. Personal guarantee cover specifically protects the individual director’s liability when a loan defaults.
Can I take out personal guarantee insurance after signing the loan?
Yes, cover is available for both new and existing guarantees. Bear in mind that the exact terms may vary based on when the policy is taken out.
Does this cover apply to joint and several guarantees?
Yes, many policies are specifically designed to cover multiple directors signing the same guarantee under joint and several arrangements.
Is it tax-deductible?
In many cases, personal insurance premiums can be treated as a business expense. We still think it’s best to check with your financial adviser, though.
Will this affect my ability to get finance?
Not in the slightest. In fact, some lenders see it as a positive step. It shows you’re managing personal risk professionally.
